Bricks rained down from a partially collapsed wall of a 126-year-old building at Eastern Market on Saturday, injuring one person and damaging vehicles.
A few blocks down the road, the walls of several other Eastern Market buildings have collapsed, and trees shoot out of holes in the roofs. The conditions of the structures at Gratiot Avenue, Service Street and Maple Street have prompted two lawsuits and dozens of blight tickets.
The site’s owner is regularly held up as an exemplary developer of affordable housing in the city: Develop Detroit LLC.
Representatives for the nonprofit say the blight is due to circumstances out of their control, like federal mandates on what developers can do and the difficulties stitching together multiple funding streams to make affordable housing projects viable.
A neighboring business owner, however, is frustrated by the lack of attention since Develop Detroit bought the buildings in 2016 and 2017. Two months ago, the city deemed the structures a hazard, sued Develop Detroit and is now requiring them to demolish the buildings.
An ambitious project and lots of delays
Develop Detroit first announced details for the $70 million development called The Hive in 2018. Plans call for more than 200 apartments, all of which will be affordable. The development would also have had 41,000 square feet of retail and a parking structure with almost 300 spaces. All the buildings were going to be demolished, though some facades might be saved. The project was expected to be done in 2020.
The project hasn’t been able to get off the ground. Develop Detroit never ended up doing any construction. It’s still invested nearly $8 million at the site for things like land acquisition, architectural work and interest carry.
CEO Sonya Mays says her firm’s hands have been tied by the challenges of securing financing for affordable housing projects, onerous restrictions on how developers can spend federal dollars and delays caused by the COVID-19 pandemic.
“I like to say we take on some of the hardest projects in Detroit,” said Mays, describing the buildings they’ve saved and turned into affordable housing for working Detroiters, veterans and senior citizens. Mays says projects can take “twice as long” as developments that don’t include large amounts of affordable housing.
The firm has successfully completed a number of projects over the years, including The Freelon at Sugar Hill and a single-family infill in the North End. It’s also a partner in the development that would house the Detroit’s People’s Food Co-op, a highly-anticipated grocery store expected to open next year in the North End. Today, it owns and operates almost 500 units across Detroit.
One local stakeholder has been optimistic and supportive of The Hive.
“Eastern Market district, just like many other neighborhoods in Detroit, needs housing, and one part of housing is affordable housing,” said Dietrich Knoer, president of the Eastern Market Development Corp. “Develop Detroit has been working hard on making this development a reality. We look forward to them breaking ground and improving that part of Gratiot with housing and retail. That’s going to be really exciting for the district and the neighborhood.”
Two property owners close to the buildings declined to comment for the article.
Mays said The Hive project has been particularly challenging because of federal financing.
Develop Detroit is looking to use federal funding for the project through the HOME Investment Partnerships Program (HOME) and the Low-Income Housing Tax Credit program. Those subsidies can be worth millions of dollars. But they also require developers to have their financing finalized and get clearance from the U.S. Department of Housing and Urban Development before doing any rehabilitation, construction or demolition.
For example, it most recently sought $3 million in HOME funds in August 2022, according to the city, which administers the program locally and undertakes environmental clearance. Julie Schneider, director of the city’s Housing and Revitalization Department, said it’s a complicated process that takes time.
“Multiple federal and state laws and authorities are reviewed and consulted as part of an environmental review,” she said by email. “Such a process can take several months to a couple years depending on the particular site.”
Mays said in an emailed statement that those restrictions can “severely limit our team’s ability to invest in certain properties.”
“If the housing development ecosystem moved with the same sense of urgency for affordable housing projects as it does for regular housing, then none of this would be an issue,” she added.
While Develop Detroit sought subsidies, wary of doing any work that might have run afoul of federal rules, the buildings continued to deteriorate. Sometime in the last year, the wall of one building off Gratiot Avenue started to crumble, and it eventually caved in.
That’s also around the time the properties started to collect blight tickets — more than 40 since last year.
Limited liability companies with ties to Develop Detroit have accrued 107 blight violations at properties across the city since 2017, according to a BridgeDetroit and Outlier Media analysis of blight records.
Mays said that the city had the wrong taxpayer address on file, and they weren’t aware of the blight tickets for months. Some were over a year old by the time they were paid.
She also denied misjudging the difficulty of the project, nor did she take any responsibility for the conditions of the buildings today.
The Hive is hardly the only sizable development project that’s struggled to get off the ground, especially since the pandemic. Construction costs skyrocketed due to supply chain backups, followed by a sharp increase in interest rates.
Affordable housing projects are even more challenging, as developers compete for a limited supply of Low-Income Housing Tax Credits. Multiple developments with affordable units have seen lengthy delays, like Lee Plaza, Sawyer Art Apartments and the Fisher 21 Lofts.
A neighbor wants answers
“I initially supported this project,” said Eric Grosinger.
A Detroit business owner and landlord, Grosinger leases building space to businesses in the district including Germack, Detroit Distillery and Detroit Vineyards. He also operates his own meat distribution company, Kaps Wholesale Food Services Inc., directly across from Develop Detroit’s crumbling properties.
“I saw no progress, no progress, no progress, and all of a sudden you’re thinking ‘these people are full of s—.’”
Grosinger said he regularly inquired about the buildings, offering to be a business partner and operate a Kaps retail shop when it was finished. He even put in a formal offer to purchase two of the buildings to demolish them, but Develop Detroit refused.
Mays said the firm only received “several low-ball offers from business stakeholders opposed to affordable housing in this area,” but did not mention Grosinger by name.
Grosinger filed a lawsuit against Develop Detroit in July. He says the blight is causing harm to his business and poses threats of rodents and possible asbestos exposure to him and his employees. He’s asking for the court to require the firm to abate the nuisance, but Grosinger said he won’t be satisfied until the buildings are demolished. The next scheduled hearing for the case is Oct. 11.
Develop Detroit applied and was approved for a brownfield redevelopment grant for the project in 2018, meaning there likely are environmental hazards at the site. The grant promised more than $16.5 million in tax incentives, including a small amount — $110,000 — for lead and asbestos removal.
Less than a month after Grosinger’s suit, the City of Detroit filed its own suit against Develop Detroit and Mays. The city’s lawsuit similarly claimed that the firm failed to address the blight over several years, creating a threat to the welfare and safety of the public. It’s one of many filed by the city in recent years in its effort to eliminate commercial blight.
The city dropped the lawsuit two weeks later after the two parties signed a consent agreement. It requires Develop Detroit to demolish all the buildings by July 18 of next year.
“Our goal is to achieve compliance short of a lawsuit whenever possible and the developer has been very cooperative in this matter,” said Conrad Mallett, the city’s corporation counsel, by email.
Develop Detroit also had two weeks after signing the agreement to remove overgrown vegetation and debris, and have any rodents exterminated, which the city said Develop Detroit has done. There is now a barricade and signage up around the site.
Mays did not explain why Develop Detroit didn’t secure the site sooner.
A new project timeline
Mays said Develop Detroit is still moving ahead with the project. Several obstacles remain in the way.
Delays in the project require Develop Detroit to get its rezoning request reapproved. City Council could take up the issue as soon as October.
It will still need an environmental clearance from the city and the Michigan Department of Environment, Great Lakes, and Energy to proceed with demolition. Julie Schneider with Detroit’s Housing and Revitalization Department said the city “expects” to complete the process so Develop Detroit can comply with the consent agreement.
The new timeline to finish the project is 12-18 months following the final financing approvals, which Develop Detroit hopes to gain early next year, Mays said.
The project may face more lengthy delays if any of the approvals fall through.
Meanwhile, Grosinger’s suit is still ongoing and could throw another wrench into Develop Detroit’s plans. He said he’s worried about the safety of his employees as the walls of the buildings crumble, potentially blowing contaminants over to his property.
“We’re responsible for providing them a safe work environment,” Grosinger said about his employees. “And I’m powerless to control the property across the street from me that could be a hazard.”
He’s not dropping his suit even with the consent agreement in place, and he said he’s looking to move the timeline for demolition up, which could jeopardize Develop Detroit’s federal funding.
“It’s not my problem,” he said. “I’ve put up with this for too long.”
Editors note: This story has been changed since its original publication to clarify that Mays responded to questions about securing the site, but did not explain why it was not secured until recently.